If a large number of foreign workers enter a labour market, it might be expected to have a negative impact on the strength of trade unions. Presenting findings from a recent study of workers in Norway, Henning Finseraas,Marianne RøedandPål Schøne explain that although a rise in immigration following the EU’s 2004 enlargement did have some important consequences for the Norwegian labour market, there was no effect on the extent to which native workers were willing to remain members of trade unions.

Is the increase of labour mobility in Europe a threat to the organisation of workers? In a recent study, we investigated the effect of labour immigration on native workers’ tendency to unionise. Our aim was to assess the extent to which the combination of cheap labour, workforce heterogeneity and a low unionisation among labour immigrants is a challenge for the strength of unions. The case we studied was the Norwegian building and construction (BaC) industry that was exposed to a strong increase in the supply of cheap labour as a result of the EU enlargement in 2004.

Although in decline, trade unions are still important agents in the political economy of many European countries. Norway is a prime example in this regard. Even though it has been slowly falling since the early nineties, the rate of unionisation is still high in the Norwegian labour force, compared to most other OECD countries. While stable among public employees, the decline has been evident among workers in the private sector. Among employees in the BaC industry, the reduction in the proportion of unionised workers has been particularly clear since 2003. Part of this decline is readily explained by the strong increase in the share of BaC workers from the new EU member countries, since the rate of unionisation is very low among the newly arrived immigrant workers. The rate of unionisation has also declined among native workers during the same period. We assessed whether the degree of immigration to their labour markets affects natives’ propensity to join a union.

Workers have social and instrumental motives for joining unions. A large literature, building on the work of George A. Akerlof, emphasises the important role of social customs, and the influence from organised colleagues, when individuals decide to join a trade union. The very low unionisation rates among newly arrived foreign workers imply that natives who are exposed to higher immigration also experience a larger share of non-unionised co-workers. Thus, if the social norm for joining the union is stronger the larger the share of co-workers who are members, this relationship may contribute to a negative effect of immigration on natives’ unionisation.

The same is true if the instrumental incentive to join is stronger when the union is powerful and able to improve the labour market situation of their members, i.e., since a central basis for union strength is union density. Another line of argument emphasises the potential negative impact of ethnic diversity on the ability of the workforce to perform collective actions. However, there is also a case to be made for a positive effect of immigration on the instrumental incentive to unionise: an increase in labour supply may lower wages and elevate the risk of unemployment. Thus, native workers may be more willing to pay the membership fee to receive the protection that unions may provide to the insiders.

In our study, we investigated the implications of labour immigration on the wages and employment of natives, as well as their propensity to unionise, i.e., to pay their membership fee. We explored high quality register data, which gave us population-wide, individual level panel data on the relevant variables. The rapid increase in cheap labour supply to the Norwegian BaC industry, following the EU enlargement in 2004, was used in a natural experiment framework. To get (exogenous) variation in the BaC workers’ exposure to the tougher competition from immigrant labour, we used detailed information about occupational licensing and certification demands. Such regulations require that all workers in certain professions must satisfy specific educational demands that are mainly possible to fulfil by attending an educational institution in Norway. Thus, workers, who through their Norwegian education have access to licensed occupations, are protected from immigrant competition.

Our results show that stronger competition from foreign workers – due to the EU enlargement – had negative effects on the earning and employment prospects of native employees in the Norwegian BaC industry. However, we found no evidence that the considerable increase in the supply of immigrant labour had effects on natives’ tendency to unionise. This result is valid both with regard to workers who were employed prior to the EU enlargement and to the new workers who entered the BaC industry after 2003.

In light of the social customs theory, as well as the prediction that cultural diversity hampers collective action, this result is somewhat surprising given exposed workers experienced a rapid increase of (non-unionised) immigrant co-workers into their labour market and work places, which had a significant economic impact. One possible explanation is that the positive effect of stronger competition from immigrants increased the need for union protection, neutralising the negative effects that work through social customs and the reduced power of unions.

While our results show that the native union members’ willingness to pay their membership fee is quite resistant to profound changes in their labour markets, unions still face the challenge of organising the newcomers. As detailed in recent research, the unionisation rate of immigrants is very low just after arrival and the catch up rate is quite slow, i.e., they need more than 15 years in Norway to close the unionisation gap to natives. We conclude that while unions should be concerned about low levels of organisation among immigrants, labour immigration is not a key reason for the decline in union membership among natives.

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3 Comments

The title and summary are misleading as the research does now answer this question. The fact that native workers remain in trade unions is compatible with immigration reducing the strength of unions, especially when immigrants increase their share among workers and do not join unions. Some of the results mentioned (but de-emphasized) provide clues that this might be the case.

This is a different topic. The research is about social impacts. There is a theory that the main reason people join unions is because of social effects where you learn from your colleagues and join unions to be like your fellow workers. We already know that immigrants are not as likely to be in unions. The question is if that means that native workers are then not as likely to join/stay in unions because they have less colleagues in unions. The research says that no, this isn’t the case and natives are just as likely to stay in unions as they were before.

I can see that. It may be interesting in its own right, but it has nothing to do with “the strength of trade unions”. That’s why I said the title and summary of this blog post are misleading – they make a much stronger claim about the implications of these findings.

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